This scenario seems likely to play out more and more in the future due to two factors. First, according to the AARP, grandparents are spending more and more on their grandkids. Indeed, 25 percent of grandparents reported spending more than $1,000 per year on their grandkids while 37 percent provided daily living expenses.

Second, in a 2000 ruling, the U.S. Supreme Court struck down one state's law that permitted courts to award grandparents visitation rights when such visitation was found to be in the best interest of the grandchild.

Grandparents from Georgia who both want to help out financially and enjoy frequent contact with their grandkids when parents are divorced should know several things before proceeding.

Most importantly, they should expect an uphill battle if the parents do not want them to have an active role in the life of their grandchild. If the grandparents still want to proceed, they should prepare to spend a great deal of time and money in order to have a court determine whether they should be provided visitation rights.

Despite these difficulties, for grandparents who want to make sure their grandchildren are financially well-off, tax laws allow individuals to give up to $13,500 in monetary gifts before before the gifts begin to trigger gift tax exemption limits. For a couple of grandparents, that means they can give as much as $27,000 per year to a grandchild before the gift reduces their lifetime gift tax exemption.

For wealthier grandparents, setting up a trust may also make sense.

Source: Reuters, "Grandparents, purse strings and divorce," Temma Ehrenfeld, July 23, 2012

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